I spend a lot of time thinking about paid, owned and earned media and how to best plan, invest and optimize our clients dollars. A fellow Empower colleague, Alec Painter, put together a great analogy the other day for paid, earned and owned media that I would like to share with you all today. Below are Alec’s thoughts which I fully endorse.
The Evolving Media Mix
Over the past year or so I have seen a lot of discussion about the media mix and the changing nature of investments made in paid, earned and owned media. As marketers and advertisers, it is important for us to understand these changing tides and the unique value that each media brings. These concepts are complex and often times understanding them means hitting a moving target. It’s easier to use a simple analogy to get at the heart of the matter. This time, I chose something simple that most Americans should be able to understand: personal finance.
Think of paid media as your walking around money. I know that money in my budget will buy the tank of gas that is going to get me to work in the morning. It will also buy the cereal that I eat before leaving. That walking around money also buys the clothes that I wear and pays my utilities. It even got my dog the rawhide thing she is destroying on my carpet right now.
Paid media behaves much in the same fashion. If an advertiser spends this much they know that they will get that much in return. I can execute a multi-million dollar TV buy and expect to get X impressions and reach. I can pay for a contextual targeting display campaign paired with some paid search that will likely yield Y visits to my website. Like my walking around money, I know what I can get for it and it serves a distinct purpose. I can use it almost immediately and it is infinitely scalable (unfortunately, my paycheck is not).
When I look at earned media, I start to think of investment, but more smaller investments. It reminds me most of the money I set aside in my 401k or my yearly contributions to a Roth IRA. I cannot predict what is going to happen to the funds I have invested those accounts in. Like paid media, it could be infinitely scalable and I could be wealthy beyond my wildest dreams in ten years. It is also unfortunately unpredictable and the markets could tank tomorrow and I could lose all of my investments.
That is why of these investment accounts when I relate this analogy to media. Earned media is hard to predict, but you make the investment predicated on the assumption that if you manage the investment appropriately, it will yield something greater than the expense I incurred in that investment. If I manage my social media channels in the right way, craft good consumer experiences with engaging content, if I listen carefully and respond in the right way, I will stimulate word of mouth conversations that are practically priceless and worth much more than the money I invested in the exercise.
The last part of the media mix has been all the rage recently as I see an explosion of interest surrounding new(er) tactics like content marketing. It’s likely the hardest to fit into this analogy, and some people might disagree, but I see owned media almost the same way I see a mortgage. You take a huge investment in a down payment on a home and then take out a sizable, secured loan.
And for what?
For starters, you get the satisfaction (or dissatisfaction) of home ownership and the cost efficiencies of not paying rent. But, more importantly, you also build up your personal equity. Your timely payments mean that one day you can borrow against the equity you have built. And the occasional room addition or kitchen facelift will increase that personal equity and the value of that asset.
I see owned media as highly similar. It is typically a sizable investment up front, and while most brands have enough marketing dollars that they don’t need a bank loan, they are usually borrowing that money from other places in their marketing budget. But once you make the investment in owned media, it is yours to do with what you want. Your level of control is 100%. It could take awhile to scale, but sustained owned media engagement has the potential to build enormous brand equity, customer relationships, and can even start to yield earned media.
Heck, you can even choose to start to monetize your owned media investment (timeshares anyone?).
Managing Assets and Balancing Your Portfolio
So great. We have all of these analogies that help us understand how these types of media behave and some of the intricacies within. What do we do now? We have our marketing budgets. We have our business goals and objectives for the year. Which type of media do we invest in?
The answer: all of them. Assuming that everything is managed appropriately, the best use of my money is to contribute to my investment accounts, build up my personal equity, and still be able to pay my bills and keep my dog well stocked in rawhide. The same goes for your marketing dollars. Use your paid media appropriately, put some of your marketing budgets toward earned media, have the long-term view to invest in the right owned media, and your ultimate payoff will be larger than if you had chosen to stick with just one.
::By Alec Painter